Congestion
on the Washington Beltway will ease at last when a
private consortium builds new lanes, upgrades the
roadway and uses variable- pricing tolls to
establish free-flowing traffic.

Good
news, Northern Virginia commuters: Relief for
Beltway gridlock is on the horizon, thanks to the
Commonwealthís embrace of innovative,
market-based congestion solutions.

On
September 10th, the Virginia Department of
Transportation (VDOT) announced that it had
settled on terms with a private-sector consortium
to finance, build, and operate four new
high-occupancy toll (HOT) lanes on a 14-mile
section of the Capital Beltway stretching from the
Springfield Interchange at I-95 to north of the
Dulles Toll Road. This will be the first major
Beltway expansion in several decades and will
include significant repairs and upgrades of the
existing roadway.

When
completed, buses and carpoolers will be able to
drive in the new HOT lanes for free, while single-
and double-occupancy vehicles will have the option
to pay to use the new lanes, giving them a
guaranteed express travel option when they need to
get somewhere on time. (Note: for a detailed
overview of HOT lanes, see Geoff Segalís March
2007 Baconís Rebellion column, "HOT
to Trot.")

Variable
pricing is the key to preventing congestion on the
new lanes. Tolls will rise and fall based on the
amount of traffic on the lanes to maintain
free-flow conditions at all times, even rush
hours. Adjusting toll rates is the only proven way
to maintain free-flowing lanes over the long term.

Because
they're free-flowing, HOT lanes move a lot more
people than congested freeway lanes. By drawing
traffic away from the main lanes, HOT lanes also
benefit drivers who opt not to pay tolls. Further,
the ability to keep the lanes moving will make it
possible, for the first time, to introduce
reliable bus transit service on this stretch of
I-495.

The
Beltway HOT lanes represent a market-based
congestion solution in another important way.
Faced with declining transportation dollars and a
dysfunctional federal highway funding system that
diverts limited resources from priority to pet
projects, states are increasingly partnering with
the private sector to build new roads and combat
congestion. Public-private partnerships like the
Beltway project can mobilize large new sums of
private capital investment to meet a significant
share of the need for new highway capacity and
reduce the reliance on traditional, tax-based
financing. In this case, the Texas-based
construction firm Fluor Corporation and Australian
toll road operator Transurban have agreed to
finance over three-quarters of the projectís
$1.7 billion cost in return for the right to
build, operate and maintain the lanes for 75
years.

Commonwealth
taxpayers will benefit from this partnership in
several key ways:

Tapping
private capital: The injection of private
capital frees up tax dollars for other
transportation projects and will expand the
Beltway years faster than would have otherwise
occurred.

Only
users will pay: Anyone who uses the Beltway
today will still be able to drive the road without
paying tolls. Use of the toll lanes will be
entirely voluntary, ensuring that the costs of the
new lanes will be borne by those that choose to
use them.

Private-sector
efficiencies: VDOTís original plan to add
four HOV lanes to this section of the Beltway
would have cost taxpayers over $2.4 billion.
Without private sector funding and expertise, the
project would have been prohibitively costly to
build. The Fluor/ Transurban team applied value
engineering and design changes to shrink the
footprint of the project, cutting the costs
dramatically and minimizing the amount of land to
be acquired through eminent domain. As VDOT
Commissioner David Ekern recently opined, the
partnership will bring ďan affordable solution
to the most congested highway corridor in
Virginia".

Revenue
sharing: If the project is a financial
success, Virginia taxpayers will benefit from a
revenue sharing agreement that kicks in if toll
revenues exceed certain levels. These additional
revenues can supplement existing funding and help
the Commonwealth get other gridlock-busting
projects built faster.

Luckily
for commuters and taxpayers, this type of
innovation is unlikely to stop at the Beltway.
VDOT and Fluor/Transurban are currently in
negotiations on a separate project that would add
new HOT lanes on I-95/395 and extend two new lanes
south to Massaponax. And earlier this year,
Governor Kaine signed a bill granting public toll
agencies in Northern Virginia and Hampton Roads
the authority to craft similar public-private
partnership deals to advance needed road projects
in their regions. Officials in Maryland may
ultimately follow Virginiaís lead; theyíre
currently considering several similar toll lane
projects on the Beltway and other highways.

As
the Beltway HOT lanes project demonstrates,
tolling and public-private partnerships need to be
part of the solution if Virginia is serious about
getting traffic moving. The willingness of
transportation officials to embrace market-based,
taxpayer-friendly mobility solutions will
dramatically improve their ability to reduce the
congestion that increasingly threatens
Virginiansí quality of life and the economic
health of our cities.

--
September 17, 2007

Leonard
C. Gilroy,
AICP, is a Director of Government
Performance at the
Reason Foundation and and Senior Fellow for
Government Reform at the Thomas Jefferson
Institute for Public Policy.